The US Department of Energy is spreading $500 million across seven battery companies to loosen China's grip on lithium and battery materials, but industry experts say closing the gap needs decades and hundreds of billions of dollars. Albemarle, the largest US lithium producer, sits in the middle of that policy story even as demand and pricing outside Washington's control drive its near-term results.
China's Grip Runs the Full Chain
The Department of Energy is spreading $500 million across seven US battery companies, and the industry experts interviewed for a CNBC segment on the program were candid about the scale of the task. One expert put the real cost at decades and tens, if not hundreds, of billions of dollars, with the US realistically holding closer to five, six or seven years to close the gap.
China's dominance is stacked at every layer. China produced 85% of the world's cathode active material and more than 90% of anode active material in 2025, and downstream it holds 80% of global battery cells and 70% of the world's electric vehicles. Chinese battery pack prices were already lower than North American and European packs, and that gap widened between 2022 and 2025.
Federal Money Targets the Midstream Gap
The DOE dollars target midstream processing, the step that turns raw material into battery-grade lithium. Raef Sully, whose company received a $100 million federal grant for a Great Salt Lake lithium project, said the award covers about a third of phase one capital and that his process is "bypassing that important step, that processing step that China has a chokehold on today."
Albemarle is chasing the same bottleneck with a direct lithium extraction pilot at the Salar de Atacama. The pilot has logged over 3,000 operating hours with recovery rates above 90%, against 30% to 40% for conventional ponds. Albemarle is funding that work off $638 million in Q2 free cash flow rather than federal grants.
But policy whiplash is undercutting that progress. $24 billion of US battery projects were canceled between January 2025 and August 2026, and an industry expert said a stable policy environment that doesn't ricochet between administrations is the single most critical factor for successful industrial policy.
Demand, Not Supply, Is the Binding Constraint
Even so, an industry expert on the segment said the ultimate challenge is demand. US EV sales fell 36% year over year in the fourth quarter of 2025 after federal purchase credits expired, a shock no supply-side grant can offset.
Stationary storage is filling part of the gap. Energy storage accounted for roughly 15% of global battery demand in 2025, about double that share in the United States. Albemarle expects storage to represent about 30% of global lithium market demand in 2026. CEO Kent Masters said global lithium consumption was up 45% year over year through May.
Albemarle traded at $129.57 as of the September 8 close, up 60.13% over the past year but down 7.94% year to date. The $500 million DOE program is unlikely to reprice that gap on its own, and the lithium tightness described by Albemarle's management remains a story that plays out far from Washington's grant announcements.
Source: 24/7 Wall St. (via Yahoo Finance)
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